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Tuesday, January 25, 2011

Pot meets pop: Local entrepreneur plans to market line of smartly branded medical-marijuana soft drinks

Clay Butler and his soda pot. (Bill Lovejoy/Sentinel)



SOQUEL -- How strange is the emerging world of medical-marijuana entrepreneurship?

Consider Clay Butler, who may soon be marketing a food product that he's never tasted, and that he would never buy. The product is called Canna Cola, and it's a soft drink that contains THC, the psychoactive ingredient in marijuana, aimed at medical marijuana dispensaries.

"I don't do drugs," said the Soquel-based commercial artist. "Never have. I never drank, never smoked. I'm a clean-living guy. I've had two beers in my whole life, and I remember them both too. No marijuana, I've never smoked a cigarette. I take an aspirin when I get a headache. That's it."

Yet, Butler is a partner in a company that is poised to move aggressively in a market that could one day be enormously popular by combining pot with soda pop, two products widely seen as scourges by many Americans -- though those upset by one tend to be approving or indifferent to the other.

"Even though, personally, I'm not interested and I don't think it's right for me," said Butler, "I'm a firm believer that adults have an inalienable right to think, eat, smoke, drink, ingest, decorate, dress any way they choose to do so. It's your life; it's your body."

What really intoxicates Butler is branding, the art of differentiating a product in the marketplace through words and images. And he's designed a line of soda pop that he says will be branded to take advantage of an entirely new market. The line includes the flagship cola drink Canna Cola, the Dr Pepper-like Doc Weed, the lemon-lime Sour Diesel, the grape-flavored Grape Ape and the orange-flavored Orange Kush. Marijuana sodas do exist in the marketplace. But, said Butler, none of them have the branding savvy of his product.
"You look at all the marijuana products out there, and they are so mom-and-pop, hippie-dippy and rinky-dink," he said. "If someone can put every color on the rainbow on it, they do. If they can pick the most inappropriate and unreadable fonts, they will. And there's marijuana leaves on everything. It's a horrible cliché in the industry."

Butler's epiphany was to market the THC-laced sodas "how Snapple or Coca-Cola or Minute Maid would make a marijuana beverage, if they ever chose to do it." 

Thus, he used the marijuana leaf -- it's an unavoidable part of the "brand DNA" of marijuana products, he said -- but he designed a leaf made of bubbles, to suggest soda pop.

The beverage line's dosage of THC will be "somewhere between 35 to 65 milligrams," said Scott Riddell, the founder of Diavolo Brands, which is marketing Canna Cola. He said the levels of THC in his line of soft drinks will be substantially below the levels of many drinks now on the market. He likened his product to a "light beer" alongside high-proof liquors.

"It's got a mild marijuana taste," Riddell said. "But the taste factor is really negligible compared to some competitors with three times the THC. When you get to that level, you really have a heavy aftertaste."
The new sodas will retail for between $10 and $15 per 12-ounce bottle. 

The company plans to launch its product in medical marijuana-friendly Colorado in February. California, however, remains a wild card. Plans are tentatively to have it in California dispensaries in the spring.
But, Riddell said, he is concerned about a bill in Congress, the so-called Brownie Law SB 258, which would double the penalties for anyone who produces a product that combines marijuana with "a candy product" or markets it to minors. The bill, which was sponsored by Sen. Dianne Feinstein, passed the Senate last summer and is currently in the House. The bill poses a threat to all so-called "medibles," food products containing THC, Riddell said.

Working in the medical marijuana field presents entrepreneurs with unique challenges. The use of marijuana for any purpose is still illegal in federal law, despite various state laws regarding its medicinal use. As a result, the soda cannot be transported across state lines. Canna Cola sold in California would have to be manufactured in California. The company also has to conform to a wide range of county and municipal laws regarding medical marijuana.

And then there's the supplier factor. Butler said that his company has had to inform all of its suppliers -- bottles, caps, the shrink-wrap labels that go on each bottle -- about the nature of their product. Many have balked. 

"We tell everyone flat out what the product is. We can't have a supplier finding out after the fact and saying, We can't be involved in this.' Not everyone will take your job," he said. "Of course, if we're selling cigarettes or alcohol or Vicodin or Viagra, it would be fine."

Assuming the Canna Cola line becomes profitable selling to dispensaries, its business profile will change dramatically if marijuana should ever become decriminalized on a federal level. If that were to happen, Butler doubts the food-industry behemoths will dive into the market immediately.

"My suspicion is that, if some day it is decriminalized, and you can get marijuana products in a liquor store or a 7-Eleven, I really don't think it would be the big established food companies that would get involved," Butler said. "I could see them buying out existing brands, which is a lot easier for them anyway. I think the market is going to the early pioneers."